Mazu website founder Janice Taylor has more friends than she ever realized in the business world.
After going public about her loan dispute with the Southern Interior Development Initiative Trust last week which threatened the future of her company and caused her staff to miss two paycheques in January, several investor angels offered to come to her rescue.
“The day after that story broke I started getting calls from other lenders across the country, people in Vancouver, Toronto and Montreal, who were telling me how ridiculous the situation was for us to be put in,” Taylor said.
|Janice Taylor stands behind a Mazu computer terminal showing on screen a graphic thank-you card designed by the staff to thank website investor Valley Curbing for ensuring the group would be paid for the month of January while the company looked to resolve its funding crisis. Photo: Barry Gerding: Black Press|
“Prior to this I never really looked at Kelowna as a community centre in a lot of ways, as someone being from Saskatchewan. But what I learned from this experience is a lot of people here were supportive and behind us to find a way through it.”
Mazu’s business premise is to develop a website for youth and their families that delivers a positive message and relies on selling subscriptions to the site to earn revenue.
Taylor’s “experience” centred on negotiating a verbal agreement for a 3 1/2 year loan extension with SIDIT, only to find out in late December SIDIT was unwilling to continue as a subordinate lender over the length of the loan extension.
SIDIT wanted to the right to review that position each year of the contract extension, which in turn scared away potential Mazu tier 1 financial institution lenders.
Taylor said normally tier 1 investors are first in line for reclaiming their investment should a company falter, while a public trust and other lesser value investors would agree to be subordinate lenders, because the financial incentives and longer-term business strategy outlook are different between tier 1 and subordinate investors.
“As a public trust, they are supposed to be investing in local businesses for the long-term, to provide stability for businesses trying to reach a profitable stage, not to be calling out loans and acting like a profit-driven financial institution,” Taylor said.
“They are not supposed to be investing their $50 million seed money just to make more money. They are supposed to invest that money in the business community, get that money paid back and reinvest it again in the business community.
“It doesn’t do anyone any good to have that trust money earning interest revenue. That is not the original intent behind SIDIT being formed in the first place. It is not how similar funds established for Vancouver Island and the northern Interior work.”
Taylor said a new board was appointed to SIDIT this fall and they need to get a better handle on how the public trust is operating.
“You need to have people in administrative positions who understand how the investment game works, how to work with other lenders to help companies like ours, and that is not happening right now for us and for others as well who don’t want to come forward for fear of recriminations,” she said.
“I received a letter from SIDIT threatening to sue me and stating that I was in default of my loan, which was not accurate and led to potential lenders backing away from us because we were labelled as being in default of our loan.”
Pam Deveau, a spokesperson for SIDIT, sent a response to Taylor’s initial criticism to the Kelowna Capital News this week, saying the public trust’s objective remains to assist in the growth and diversity of the Southern Interior economy.
“Since 2006, SIDIT has preserved the initial $50 million an invested over $60 million in projects worth over $218 million, that have created over 3,000 jobs,” Deveau stated in the email.
“It is income from its loans and equity investments that has allowed SIDIT to grant over $6 million duing the past 13 years to local communities, post-secondary institutions and non-profit organizations.”
She stated while clients may not always understand the SIDIT board’s position, “…unfortunately, despite a client’s passion, effort and management expertise their ventures are not always successful.”
In the aftermath of publicly venting her frustration with SIDIT, Mazu now has financial options that have taken the website off the endangered list.
A Calgary-based investment firm, Old Kent Road Financial Fund, has offered to pay out the loan to SIDIT, which now stands at $452,000, with Taylor hoping those negotiations will close out with a final agreement early next week.
She is also working to secure bridge financing to carry the company forward until she heads to Silicon Valley this month with the objective to raise $5 million in further equity capital.
Mazu was also invited this week as one of 20 global technological companies to be featured at the South by Southwest Conference in Austin, Tex., the investment starting point from which other high profile tech companies like Snapchat, Twitter and Instagram were launched.
And one of her investors, Valley Curbing, stepped up and provided a $50,000 cheque to help cover the staff payroll for the month of January after hearing of the company’s plight.
“There is no connection between what Valley Curbing does as a business, earning money pouring concrete, and what we do, yet they stepped forward and did what they did,” Taylor said. “They believed in us and it was such a great thing for them to do.”